SEC Chair Gary Gensler Recommends Congress Regulate Crypto Exchanges

“There’s really no protection around fraud or manipulation,” Gensler said in his first public hearing since taking the reins at the agency.

AccessTimeIconMay 6, 2021 at 5:11 p.m. UTC
Updated Sep 14, 2021 at 12:51 p.m. UTC

The $2 trillion cryptocurrency market needs more investor protection in the U.S., including possible regulations for crypto exchanges, Securities and Exchange Commission (SEC) Chairman Gary Gensler said Thursday.

In his first public hearing since becoming the head of the federal securities regulator, Gensler said the SEC’s authority is restricted to securities and products or asset managers that might invest in cryptocurrencies. But he suggested Congress could take a role in bringing greater regulatory clarity, particularly around exchanges.

“Right now these exchanges do not have a regulatory framework at the SEC or at our sister agency, the Commodity Futures Trading Commission,” he said. “Right now there’s not a market regulator around these crypto exchanges and thus there’s really no protection around fraud or manipulation.”

Gensler did not specify what regulations around crypto exchanges could look like.

His comments, which came in response to a question about digital assets from Rep. Patrick McHenry (R-N.C.), also touched on a proposed rulemaking for custody, which the SEC chair said he hopes will move forward.

McHenry, who sponsored a bill addressing how the SEC and CFTC might divvy up oversight of crypto, asked how Gensler could improve regulatory clarity around digital assets.

GameStop

Thursday’s hearing was the third held by the House Financial Services Committee that looked at the regulatory response to the GameStop stock price jump earlier this year. 

Gensler did not address crypto in his pre-written opening remarks, instead focusing on aspects of the GameStop pump and other recent market events, such as the collapse of Archegos Capital. 

The new SEC chair did speak generally about technology and social media’s role in the public stock market.

“Technology can bring greater access to our capital markets,” Gensler said in his opening remarks. 

He mentioned the role of online communities like Reddit in boosting stock prices, but said he was not interested in curtailing free speech – rather, Gensler said he is interested in seeing whether malicious actors took advantage of these communities to manipulate markets.

The SEC plans to release a report this summer evaluating the GameStop frenzy and the reaction to it, Gensler said. 

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Asia: Bitcoin Rebounds Past $20K; China’s Blockchain Revolution Is Missing On-Chain Data

Ether and most other major altcoins regain ground they'd lost in last week's downturn; China companies seem unconvinced by blockchain technology.

CoinDesk - Unknown
2
CoinDesk - Unknown
NFT Platforms Should Be Caught by EU Money-Laundering Overhaul, Lawmakers Say

Unhosted wallets and decentralized finance were left largely unscathed by two landmark crypto laws agreed to last week, but left-wing lawmakers may seek another go as they discuss dirty-money rules.

CoinDesk - Unknown
3
CoinDesk - Unknown
Bitcoin se recupera y supera los $19K; Nomura advierte de una recesión en EE. UU. y Reino Unido

Nomura escribió acerca de una recesión en la eurozona, el Reino Unido y Asia Pacífico, lo que podría influir en los precios de las criptomonedas.

CoinDesk - Unknown
4
CoinDesk - Unknown
Argentinos se refugian en stablecoins durante el fin de semana tras dimisión del ministro de Economía

Los principales exchanges del país informaron que los usuarios compraron hasta tres veces más criptomonedas estables que durante un fin de semana normal, en medio una crisis económica en ciernes.

CoinDesk - Unknown